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Steel crisis POLL: Should the UK industry be nationalised?

The Government has offered to take a 25% stake in Tata Steel's UK business as part of a package of support worth hundreds of millions of pounds.

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The money will be made available on commercial terms to potential buyers of the company, the UK and Welsh governments announced.

The move was welcomed by industry and union leaders and was viewed as a positive development by sources close to a potential management buyout of the business.

Business Secretary Sajid Javid met Tata's chairman Cyrus Mistry in Mumbai on Tuesday where the minister said progress on the sales process had been made.

It is expected that all, or the large majority, of the support package, will be through the provision of debt financing.

Other options include providing hybrid (convertible debt) or alternative forms of financing and s upporting a purchaser's financing by taking a minority equity stake of up to 25% to support any sale.

The Government said it was actively working with Tata Steel and the British Steel Pension Scheme's trustees to find a solution that will help minimise its impact on a potential purchaser, and potentially separate it from the business.

Mr Javid said: "This Government is committed to supporting the steel industry to secure a long-term, viable future and we are working closely with Tata Steel UK on its process to find a credible buyer. The detail of our commercial funding offer is clear evidence of the extent of that commitment."

First Minister of Wales Carwyn Jones said: "We're committed to supporting any credible bid to secure steel making in Wales. We have worked with the UK Government to put in place this significant package of support and we believe that this will help secure a successful sale of Tata Steel's operations in Wales and the rest of the UK."

In addition to the support package, the UK and Welsh governments said they will also be willing to consider additional grant funding support, for example to support the development of power plant infrastructure, energy efficiency and/or environmental protection measures, R&D and training.

A management buyout has emerged as a potential saviour of Tata and thousands of jobs which depend on the steel industry.

Stuart Wilkie, managing director of Tata's Strip Products, based in Port Talbot in south Wales, has canvassed workers about joining a bid.

The investment he is seeking from employees could be as much as £10,000 each, according to sources. Private investors and Government support would also be needed.

The Prime Minister's official spokeswoman said the support would come in the form of debt financing.

"It would be supporting a potential buyer in order to keep the operation safe. We would work alongside a potential buyer to make sure that the Government is doing what it could to support a viable sale.

"If we were to take an extra stake it would be a minority one with the aim of supporting the purchaser in delivering a long term future for the business, we are certainly not seeking to be controlling the company."

Asked if it was part-nationalisation, she replied: " I am not sure we would accept the concept of 'part' nationalisation. We will be investing on a commercial basis. We would not see this as nationalisation. We would not be seeking to acquire a control in the business. We don't think that nationalisation is the right answer."

Roy Rickhuss, general secretary of the Community union, said: "Today's announcement is a positive step forward. This is a clear commitment to financially assist the UK steel industry as it seeks new ownership.

"We welcome the willingness of Government to support debt financing and that they remain open to taking a 25% share in the business."

Gareth Stace, director of UK Steel, said: "This is a positive first step which will provide the certainty and continuity that should enable credible investors to come forward and provide a sound future for steel making in the UK."

Angela Eagle, shadow business secretary said: "Whether you call this 'co-investment' or part-nationalisation, it is a long-overdue recognition of the need for Government support for the sale process."

GMB union national officer Dave Hulse said: "We welcome the announcement that the UK and Welsh Governments are prepared to take a minority equity stake of up to 25%.

"This gives us confidence that all credible potential new owners will be encouraged to come forward.

"It demonstrates that the Government are ready to support a credible buyer for Tata Steel UK and this would offer finance on commercial terms to support ongoing operations and deliver long-term investment in the business."

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